The Supreme Court has just issued a significant, and I think unfortunate, decision on the issue of personal jurisdiction over foreign defendants, that will be of interest to foreign companies that sell products in the American market. Before turning to the decisions, a few words of background are in order.

In the bad old days, the question of jurisdiction in personam, i.e., jurisdiction over the defendant’s person rather than over property situated in the forum state, turned on the court’s power over the defendant’s person. This approach was exemplified by Pennoyer v. Neff, 95 U.S. 714 (1878), which is the first case many law students read when they begin their study of federal civil procedure:

The several States of the Union are not, it is true, in every respect independent, many of the rights and powers which originally belonged to them being now vested in the government created by the Constitution. But, except as restrained and limited by that instrument, they possess and exercise the authority of independent States, and the principles of public law to which we have referred are applicable to them. One of these principles is, that every State possesses exclusive jurisdiction and sovereignty over persons and property within its territory. As a consequence, every State has the power to determine for itself the civil status and capacities of its inhabitants; to prescribe the subjects upon which they may contract, the forms and solemnities with which their contracts shall be executed, the rights and obligations arising from them, and the mode in which their validity shall be determined and their obligations enforced; and also to regulate the manner and conditions upon which property situated within such territory, both personal and real, may be acquired, enjoyed, and transferred. The other principle of public law referred to follows from the one mentioned; that is, that no State can exercise direct jurisdiction and authority over persons or property without its territory. The several States are of equal dignity and authority, and the independence of one implies the exclusion of power from all others. And so it is laid down by jurists, as an elementary principle, that the laws of one State have no operation outside of its territory, except so far as is allowed by comity; and that no tribunal established by it can extend its process beyond that territory so as to subject either persons or property to its decisions. “Any exertion of authority of this sort beyond this limit,” says Story, “is a mere nullity, and incapable of binding  such persons or property in any other tribunals.”

The  courts ultimately repudiated Pennoyer, changing the focus of the analysis from the state’s sovereign power and its limitations to the right of the defendant not to be deprived of property without due process of law. According to the new analysis, typified by Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945), the issue was whether the defendant’s contacts with the forum state were sufficient to make the exercise of jurisdiction comport with due process:

Historically the jurisdiction of courts to render judgment in personam is grounded on their de facto power over the defendant’s person. Hence his presence within the territorial jurisdiction of a court was prerequisite to its rendition of a judgment personally binding him. Pennoyer v.Neff, 95 U.S. 714, 733. But now that the capias ad respondendum has given way to personal service of summons or other form of notice, due process requires only that in order to subject a defendant to a judgment in personam, if he be not present within the territory of the forum, he have certain minimum contacts with it such that the maintenance of the suit does not offend “traditional notions of fair play and substantial justice.”

As with any doctrine, the cases went back and forth, sometimes finding jurisdiction proper and sometimes not. Among the most difficult issues were so-called “stream of commerce” cases, where the defendant, typically a manufacturer, sold products on the world market that ended up being sold in the United States. Did the manufacturer purposefully avail itself of the benefits of the laws of one or more of the 50 states, such that those states’ courts could, consistent with the Due Process Clause, exercise jurisdiction over it? The strict approach to this question looked at whether the defendant had taken actions specifically directed towards the forum state. The liberal approach looked at whether the defendant reasonably should have anticipated being subject to litigation in the forum state. (I have to say that while I favor the outcome of the liberal approach on this question, and the approach of International Shoe over Pennoyer, the approach is somewhat circular—the defendant may have to defend a lawsuit in a state if it reasonably should have anticipated having to defend a lawsuit in that state?)

In J. McIntryre Machinery v. Nicastro, today’s case of the day, the court returns to this question. The result of the case is reasonable, but the language in the plurality opinion (by Justice Kennedy) is troubling because it suggests a return to the limitations of state sovereignty, rather than fairness to the defendant, as the touchstone of the analysis.

McIntyre arose out of an industrial accident: Nicastro was injured while using a metal shearing machine manufactured by McIntyre in England. The asserted grounds for New Jersey’s exercise of jurisdiction were: (1) that McIntyre had a U.S. distributor (but there was no evidence that McIntyre controlled the distributor); (2) that McIntyre representatives attended annual industry conventions in the U.S. (but never in New Jersey); and (3) that between 1 and 4 of its machines “ended up in New Jersey.” The Supreme Court rejected the New Jersey Supreme Court’s holding that it could exercise jurisdiction because McIntyre reasonably should have foreseen that its products would be sold in New Jersey and because it took no steps to prevent the distribution of its products there.

The court found that McIntyre had not purposefully availed itself of the protection of New Jersey’s law, which is okay. But I’m worried by language such as this in Justice Kennedy’s plurality opinion:

The conclusion that jurisdiction is in the first instance a question of authority rather than fairness explains, for example, why the principal opinion in Burnham “conducted no independent inquiry into the desirability or fairness” of the rule that service of process within a State suffices to establish jurisdiction over an otherwise foreign defendant. 495 U. S., at 621. As that opinion explained,“[t]he view developed early that each State had the power to hale before its courts any individual who could be found within its borders.” Id., at 610. Furthermore, were general fairness considerations the touchstone of jurisdiction, a lack of purposeful availment might be excused wherecarefully crafted judicial procedures could otherwise protect the defendant’s interests, or where the plaintiff would suffer substantial hardship if forced to litigate in a foreignforum. That such considerations have not been deemed controlling is instructive.

This seems to me to be a return to focusing on formalist issues of sovereignty—what are the limitations of the state’s power outside its borders when the defendant has not consented to submit itself to jurisdiction—at the expense of focusing on the legitimate interests and expectations of the defendant, which are what the Due Process Clause should protect.

The doctrine aside, I’m struck by the, well, anti-imperial tendencies of the opinion. It seems that the courts are on a streak of narrowing the powers of the US courts over cases with foreign implications: Morrison v. Australia Nat’l Bank, 130 S.Ct. 2869 (2010) (the foreign plaintiff securities fraud case); Microsoft Corp. v. AT&T Corp., 127 S.Ct. 1746 (2007) (the extraterritorial patent infringement case). I understand the idea of a federalism agenda, in which the federal courts constrain their own power in order to respect the power of the state courts. But it’s just highly surprising to me that given the general climate of hostility to international law and the still-strong idea of American exceptionalism, the US courts would unilaterally disarm, so to speak, particularly in an area such as tort law where, as the dissent points out, the idea of suing in the place where the injury occurred is well-established elsewhere in the world.